(1)Any
five or more persons of sufficient legal capacity may organize a
domestic bank,
but for such purpose they shall first apply in writing for a permit
from the
Banking Board.

(2)The
application shall set forth and prove the need of the services of a
banking
institution in the locality wherein the bank is sought to be
established, and
that the services rendered by other banking institutions do not answer
the
needs of the locality.

(3)The
application shall also set forth the following:

(a)A
business plan showing the intended strategy for the first three years
of
operation, including the administrative and organizational structure
of the
bank, internal controls, and projected balance sheet, profit and loss
and cash
flow statements for each of the three years, together with the
assumptions on
which they are based;

(b)The
structure and adequacy of the proposed capital in relation to the
projected
volume of risk assets detailed in the business plan;

(c)The
financial capacity, history, qualifications and experience of the
applicants
and the proposed management.

Source:PL 1-94 § 301(1); PL 2-20 §
4 (part); PL
12-57 § 5.

§
302.Application for
permit—Banking
Commissioner’s investigation.

It shall be the duty of the Banking
Commissioner, immediately after the Banking Board receives an
application for a
permit, to make whatever investigations and hold such hearings as he
deems may
be necessary as to:

(1)the
banking and commercial ability and experience of the applicants;

(2)whether
such ability and experience are sufficient to warrant the efficient
functioning
and operation of the bank;

(3)whether
local need justifies the application;

(4)the
character and repute, as well as the banking and commercial experience
of the
prospective directors or officers who are to conduct the business of
said bank;

(5)whether
the bank shall be of benefit to the general public; and

(6)the
capital which the bank has available for its operations.

Source:PL 1-94 § 301(2); PL 2-20 §
4 (part); PL
9-130 § 10.

§
303.Application for
permit—Issuance by
board.

The Banking Board may issue the
permit applied for if, in its judgment, the results of the
investigations are
satisfactory.Any permit
may be granted
subject to such conditions as the Banking Board, in its discretion,
deems
necessary to protect the interests of the people of the Federated
States of
Micronesia.

Source:PL 1-94 § 301(3); PL 2-20 §
4 (part).

§
304.Articles of
incorporation—Requisites.

The articles of incorporation must
be subscribed by each of the incorporators and duly sworn to before a
notary
public.They shall
specifically state:

(1)the
name by which such bank is to be known;

(2)the
State where its main office is to be established, which shall be its
legal
domicile;

(3)the
amount of the authorized capital stock, the number of shares into
which the
same is divided, and, if they have a par value, the par value of each
share;

(4)the
term of duration of the bank;

(5)the
transactions to which the capital of the bank is to be preferably
devoted;

(6)the
time and manner of calling and holding regular meetings of
stockholders, and the
reasons and circumstances for, and manner of, calling and holding
special
meetings;

(7)the
manner of constituting a quorum at the regular and special meetings of
the
stockholders;

(8)the
names and places of residence of the incorporators and the number of
shares
subscribed by each;

(9)the
number of directors of the bank, which shall not be less than five,
and not
less than two-thirds of the total number of whom shall be citizens of
the
Federated States of Micronesia and shall have resided in the Federated
States
of Micronesia for at least one year prior to the date of the
application; the
manner of their election, their terms of office, and the number
necessary to
constitute a quorum; and

(10)any
other
articles which the incorporators may deem it advisable to insert for
the
regulation of the business and the conduct of the affairs of the bank;
provided, that such articles shall not be in conflict with this
subtitle, or
with any other laws of the Federated States of Micronesia.

Source:PL 1-94 § 301(4); PL 2-20 §
4 (part).

Cross-reference:For provisions on filing
fees, see section 626
of this title.

§
305.Certificate of
incorporation;
Beginning of corporate existence.

(1)Upon
subscribing and swearing to the articles of incorporation, as provided
in
section 304 of this chapter, and upon submitting two copies of the
same to the
Registrar of Corporations together with the permit granted by the
Banking Board
authorizing the organization of the bank, and upon payment of the
proper filing
fee, and upon the issuance by the Registrar of Corporations, under his
seal, of
a certificate stating that the articles containing the statements
required by
section 304 of this chapter have been filed in his office, the
existence of the
bank named in the articles of incorporation shall begin.

(2)From
and after the date of such filing, the bank shall constitute a body
corporate
under the name set forth in the articles.Before such bank may commence business it shall comply with the
other
requirements of this subtitle and all other applicable provisions of
law.

Source:PL 1-94 § 302.

Editor’s
note:Minor changes were made in
the phraseology of
this section in the 1982 edition of this code.

§
306.Issuance of
certificate;
Transmittal to Banking Commissioner.

Upon the issuance by the Registrar
of Corporations of a certificate of incorporation, as provided in
section 305
of this chapter, the Registrar of Corporations shall so notify the
Banking
Commissioner and at the same time shall transmit to the Banking
Commissioner a
duplicate copy of the articles of incorporation.

Source:PL 1-94 § 303(1); PL 2-20 §
5 (part); PL
9-130 § 11.

§
307.Examination for
compliance.

(1)When
the duplicate copy is received by the Banking Commissioner, he shall
notify the
corporation, and the corporation shall then file with the Banking
Commissioner
a statement of all the facts necessary to enable him to determine
whether the
bank has in fact complied with all the requirements of law and is
lawfully
entitled to commence business, such statement to be sworn to by a
majority of
the directors and by the president or the manager of the bank.

(2)Upon
receipt of such statement by the Banking Commissioner, he shall
examine the
condition of the corporation and ascertain specifically the amount of
its
capital paid in; the names and places of residence of its
stockholders,
directors, and officers; the amount of the capital stock which each
owns in
good faith; and, generally, whether such corporation has complied with
all the
provisions of law required to entitle it to a license to engage in the
business
of banking.

Source:PL 1-94 § 303(2); PL 2-20 §
5 (part); PL
9-130 § 12.

§
308.Issuance of bank
license.

(1)If,
upon careful examination of the facts so reported, or of any other
relevant
facts which may come to his knowledge, the Banking Commissioner is
satisfied
that such bank has complied with all the applicable provisions of this
subtitle,
with any conditions in the Banking Board permit required to be
satisfied prior
to licensing, and with other laws required to be complied with before
a bank
shall be authorized to commence the business of banking, he shall
issue a
license to engage in the banking business pursuant to section 501 of
this
subtitle. The license shall contain any conditions of the Banking
Board permit
intended to survive past issuance of the license.

(2)The
Banking Commissioner may withhold from a bank the license authorizing
it to
commence business whenever he is satisfied that the shareholders have
organized
the bank for any other than the legitimate objectives determined by
this
subtitle.

(3)The
expenses incurred by the Banking Commissioner in connection with such
investigations shall be paid by the corporation in conformity with the
regulations the Banking Board may promulgate for that purpose.

Source:PL 1-94 § 303(3); PL 2-20 §
5 (part); PL
9-130 § 13.

§
309.Amount and
ownership of capital
stock.

No domestic bank shall be organized
and established in the Federated States of Micronesia with a capital
stock less
than $1,000,000, which shall be paid in cash before the bank shall be
authorized to commence business, and at least two-thirds of which
shall be
owned by persons who are citizens of the Federated States of
Micronesia and who
shall have resided in the Federated States of Micronesia for at least
one year
prior to the application.

Source:PL 1-94 § 304; PL 1-154 § 3;
PL 12-57 § 6.

§
310.Amendment of
articles of
incorporation.

(1)Every
bank organized under this subtitle may amend its articles of
incorporation with
the approval of the Banking Board for any lawful purposes.

(2)No
amendment may contain a provision which it would not have been lawful
and
proper to insert in the original articles of incorporation.

(3)No
change shall be made in the articles of incorporation by which the
rights or
security of the existing depositors or creditors of the bank shall be
impaired.

Source:PL 1-94 § 305.

Editor’s
note:Minor changes were made in
the phraseology of
this section in the 1982 edition of this code.

§
311.Establishment of
offices abroad.

Except with the consent in writing
of the Banking Board, no domestic bank licensed under this subtitle
shall
establish a branch, agency or office outside the Federated States of
Micronesia.